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News Release 1995-122
November 9, 1995
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The Office of the Comptroller of the Currency (OCC) announced today new guidance for examiners on derivatives related to futures brokerage activity. The guidance applies to subsidiaries that operate as futures commission merchants (FCM) registered with the Commodity Futures Trading Commission.
"One of the lessons for bank regulators from the Barings failure was the clear need for this guidance," said Douglas E. Harris, OCC Senior Deputy Comptroller for Capital Markets. "The Barings failure was due in part to a futures subsidiary with woefully inadequate internal controls. Our guidance stresses these controls as fundamental to the safe and sound operation of futures activities."
The OCC guidance includes the following:
The guidance also calls for an FCM to have, at a minimum, one designated compliance officer. Compliance should include standards for disclosure of risk to customers and a plan for ethics training for FCM employees.
The FCM guidance can be obtained from the OCC's automated fax system at (202) 479-0141. At the voice prompt, enter document number 1022 and 1023, or write to Comptroller of the Currency, Communications Division, Washington DC 20219.
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